Welcome!

Log Management Authors: Dana Gardner, Pat Romanski, Elizabeth White, David H Deans, Carmen Gonzalez

Related Topics: CRM, IBM Cloud, Log Management, @CloudExpo

CRM: Blog Feed Post

Can Spot Pricing Work For Cloud Storage?

Amazon has taken a step with EC2 that many had long anticipated and announced spot pricing for cloud compute instances

Early Bird Savings at Cloud Expo

This week, Amazon took a step with EC2 that many had long anticipated: They announced spot pricing for cloud compute instances. EC2 customers can now name their own price, and Amazon will bring compute instances up at variable discount prices according to these "bids". This complements their March 2009 move at the other end of the spectrum, extra-cost reserved instances. This evolution of the cloud compute market was predicted by many, but Amazon deserves credit for making it happen.

The obvious next question is whether spot pricing can work for cloud storage. Although there are cases where spot pricing might make sense, the nature of data storage trends against this sort of pricing model. Let's explore the question further.

Cloud Compute

Cloud compute is obviously different from cloud storage: The former deals with running applications and the latter with storage of data. That the nature of usage of the these services is so different often comes as a surprise. Compute instances tend to be peaky, coming online, spiking, dissipating, and shutting down quickly. One can imagine cloud compute instances matching the graphic below, taken from my own educational slide deck, where cloud compute instances peak daily and fall off each night over the period of a week.

The value of cloud compute is illustrated clearly here: Rather than buying 2/3 the CPU capacity, as in a virtual infrastructure, this workload can be satisfied with just 1/3 the capacity by leveraging a cloud compute platform. Your mileage may vary, of course, but this real-world example shows why so many are perfectly happy to buy compute capacity on demand.

This also illustrates why spot pricing is so attractive to the service provider. The load on their infrastructure undoubtedly matches this pattern, with peaks and valleys over short periods of time. Charging a premium for reserved instances attacks the peaks by scaling up capacity, and offering discount non-reserved spot instances fills the valleys. Although the Priceline-esque "name your own price" concept might turn some off, it makes good sense in cloud compute.

Note that Amazon's spot instance pricing scheme is not quite this straightforward: They compute a spot price based on bids for compute instances in each region. Any bids below this threshold will not be run regardless of available capacity, so it is wise to monitor the current prices and not under-bid!

Cloud Storage

Cloud storage is different. Most cloud storage use cases involve long-term retention of large amounts of data. Imagine a gallery of images, a document repository, or an archive of voice mail recordings. These examples are drawn from real-world Nirvanix cloud storage customers, and it's hard to see where spot pricing fits in.

The typical cloud storage use case matches the graphic above, with steady growth of capacity over time. It's easy to see why cloud storage is so attractive, since capacity is provisioned and charged on demand rather than in large under-utilized steps. Regardless of whether internal systems are 90% or 10% over-provisioned, waste of storage capacity is a massive ROI opportunity for public cloud storage providers.

Some cloud storage users cap their applications, deleting old content as new data is added, but very few rapidly add and delete data. Cloud or not, storage just doesn't tend to fluctuate. One can imagine corner cases where capacity swings up and down, but these are not the norm.

One reason is the inertia of storage: It's physically difficult to move large amounts of data. Although cloud storage systems are remarkably open, allowing customers to easily migrate between providers, transmitting the data still takes time. The time and cost required to switch from one provider to another would likely wipe out any savings from spot pricing.

Getting Creative

Although spot pricing will likely never be widespread in storage, one can still imagine creative pricing strategies for cloud storage. Most providers, for example, now offer tiered pricing, discounting the per-GB cost as customers pass usage thresholds. Another popular concept is bundling expensive bandwidth to simplify the cost structure. Budgeted pricing is also popular, with a flat monthly invoice replacing the charge-as-you-go credit card model used by consumer-oriented services.

What might the future hold? Once can imagine further bundling and simplification, especially as standard APIs and applications are used to access cloud storage providers. Geographic arbitrage could soon become the norm, with remote or inexpensive data centers offering discount capacity. The federation of multiple providers is another exciting frontier to be explored. And some applications might even make use of spot pricing, but those are likely to be rare.

Read the original blog entry...

More Stories By Stephen Foskett

Stephen Foskett has provided vendor-independent end user consulting on storage topics for over 10 years. He has been a storage columnist and has authored numerous articles for industry publications. Stephen is a popular presenter at industry events and recently received Microsoft’s MVP award for contributions to the enterprise storage community. As the director of consulting for Nirvanix, Foskett provides strategic consulting to assist Fortune 500 companies in developing strategies for service-based tiered and cloud storage. He holds a bachelor of science in Society/Technology Studies, from Worcester Polytechnic Institute.

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


IoT & Smart Cities Stories
Dynatrace is an application performance management software company with products for the information technology departments and digital business owners of medium and large businesses. Building the Future of Monitoring with Artificial Intelligence. Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more busine...
Nicolas Fierro is CEO of MIMIR Blockchain Solutions. He is a programmer, technologist, and operations dev who has worked with Ethereum and blockchain since 2014. His knowledge in blockchain dates to when he performed dev ops services to the Ethereum Foundation as one the privileged few developers to work with the original core team in Switzerland.
René Bostic is the Technical VP of the IBM Cloud Unit in North America. Enjoying her career with IBM during the modern millennial technological era, she is an expert in cloud computing, DevOps and emerging cloud technologies such as Blockchain. Her strengths and core competencies include a proven record of accomplishments in consensus building at all levels to assess, plan, and implement enterprise and cloud computing solutions. René is a member of the Society of Women Engineers (SWE) and a m...
Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settlement products to hedge funds and investment banks. After, he co-founded a revenue cycle management company where he learned about Bitcoin and eventually Ethereal. Andrew's role at ConsenSys Enterprise is a mul...
Whenever a new technology hits the high points of hype, everyone starts talking about it like it will solve all their business problems. Blockchain is one of those technologies. According to Gartner's latest report on the hype cycle of emerging technologies, blockchain has just passed the peak of their hype cycle curve. If you read the news articles about it, one would think it has taken over the technology world. No disruptive technology is without its challenges and potential impediments t...
If a machine can invent, does this mean the end of the patent system as we know it? The patent system, both in the US and Europe, allows companies to protect their inventions and helps foster innovation. However, Artificial Intelligence (AI) could be set to disrupt the patent system as we know it. This talk will examine how AI may change the patent landscape in the years to come. Furthermore, ways in which companies can best protect their AI related inventions will be examined from both a US and...
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, discussed how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team at D...
Bill Schmarzo, Tech Chair of "Big Data | Analytics" of upcoming CloudEXPO | DXWorldEXPO New York (November 12-13, 2018, New York City) today announced the outline and schedule of the track. "The track has been designed in experience/degree order," said Schmarzo. "So, that folks who attend the entire track can leave the conference with some of the skills necessary to get their work done when they get back to their offices. It actually ties back to some work that I'm doing at the University of San...
When talking IoT we often focus on the devices, the sensors, the hardware itself. The new smart appliances, the new smart or self-driving cars (which are amalgamations of many ‘things'). When we are looking at the world of IoT, we should take a step back, look at the big picture. What value are these devices providing. IoT is not about the devices, its about the data consumed and generated. The devices are tools, mechanisms, conduits. This paper discusses the considerations when dealing with the...
Bill Schmarzo, author of "Big Data: Understanding How Data Powers Big Business" and "Big Data MBA: Driving Business Strategies with Data Science," is responsible for setting the strategy and defining the Big Data service offerings and capabilities for EMC Global Services Big Data Practice. As the CTO for the Big Data Practice, he is responsible for working with organizations to help them identify where and how to start their big data journeys. He's written several white papers, is an avid blogge...